The world’s leading bullish private equity fund in the Philippines
October 6, 2021 | 00h00
MANILA, Philippines – Leading global private equity firm Warburg Pincus is optimistic that the Philippines will recover from the pandemic-induced recession and is ready to invest more in the country.
Saurabh Agarwal, chief executive of Warburg Pincus, told attendees of the 53rd annual conference of the Financial Executives Institute of the Philippines (FINEX) that the Philippines could rebound strongly after entering recession last year due to the pandemic.
The New York-based private equity fund sees the Philippines’ gross domestic product (GDP) grow 4.3% this year, 5.1% next year and 6.6% in 2023 after declining by 9.6% last year as the economy came to a halt when the country imposed the longest and strictest lockdown in the world.
While the outlook may seem bleak to many, Agarwal said Warburg Pincus strongly believes the pandemic will be more of a drag in the short term and things will improve significantly once vaccines are deployed and scaled up. , paving the way for a full recovery to pre-COVID level by 2023.
âIn our view, the long-term fundamentals of the Philippines remain largely intact. We expect the Philippines to rebound significantly and resume its strong growth path of over five percent, which would continue to set it apart from other economies in a relatively slow growing world, âhe said. .
Agarwal said the government has put in place a supportive fiscal policy, while the Bangko Sentral ng Pilipinas (BSP) has maintained an accommodative policy, with the benchmark interest rate held at a record 2% for allow economic recovery to gain ground.
He also said that the Philippines is a priority market for Warburg Pincus as it is the second largest country in Southeast Asia with a population of 110 million and a favorable demographics since 70% are under 40 years.
In addition, he said the Philippines has the highest private consumption in the region at 75% of GDP and has a rapid compound annual real GDP growth rate of 5.9% from 2021 to 2023.
Founded in 1966, Warburg Pincus has raised 19 private equity funds, which have invested more than $ 94 billion in more than 940 companies in more than 40 countries.
It is one of the most active private equity firms in Southeast Asia, with funds reaching up to $ 3 billion since entering the region in 2013 and opening an office in Singapore in 2019.
In the Philippines, Warburg Pincus, through Coherent Cloud Investments BV, invested $ 225 million for a 29% stake in Dennis Anthony Uy’s Converge ICT Solutions Inc. in 2019.
Converge raised $ 600 million through an initial public offering in October of last year, the largest IPO in the Philippines at time of listing and the largest IPO on the market. strip in Southeast Asia.
While the global health crisis has not changed Warburg Pincus’ core investment philosophy, he said the pandemic has created unique investment opportunities in countries, including the Philippines.
âThe Philippines is significantly under-penetrated in all major financial products. About 70 percent of the population is unbanked, only a few have access to formal loans and very few have access to credit cards or insurance, âhe said.
In this context, the private equity firm is witnessing accelerated adoption of financial technology products, which translates into a strong opportunity in the new economy, financial services, with the rise of e-wallets, digital banking and of digital asset management.
âThe digital economy is starting to reach an inflection point in emerging Southeast Asia, including the Philippines, as customers shift their consumption to online channels. “